Airconditioning and commercial refrigeration major, Blue Star Limited reported Total Operating Income of Rs 845.48 crores for the quarter ended June 30, 2014, as compared to Rs 770.82 crores in Q1FY14, representing an increase of 10%.

Earnings per share for the quarter (Face value of Rs 2.00) stood at Rs 3.45 vis-à-vis Rs 2.53 in the corresponding quarter of the previous year.

The Electro Mechanical Projects and Packaged Airconditioning Systems business, accounting for 40% of the total revenues in the quarter, declined 4% while segment results registered a sharp decline of 70% to Rs 5.42 crores. The decrease in profitability was mainly due to slower execution of projects resulting in lower billings coupled with cost overruns in specific legacy projects. However, such legacy projects now form a small base of the total order book and the margin of this business is likely to improve over the next few quarters since the rest of the order book comprises projects with healthy margins.

Cooling Products revenue comprised 57% of the total revenues of the Company during the quarter. The segment registered a growth of 22% driven by enhanced sales of room airconditioners and refrigeration products due to an extended summer and superior brand perception. Segment results grew significantly by 67% to Rs 70.59 crores over the same period mainly due to higher manufacturing capacity utilisation due to indigenisation, stable foreign exchange and higher price realisation.

The Professional Electronics and Industrial Systems segment revenues increased by a marginal 2%, while segment results declined 24% to Rs 4.27 crores, owing to the unfavourable business climate.

Carry Forward Order Book as on June 30, 2014 increased by 9% to Rs 1572 crores as compared to Rs 1438 crores as at June 30, 2013.

Outlook

The economic environment is showing signs of improvement with the formation of a stable Government. While the electro mechanical projects business continues to be adversely impacted mainly due to significant correction in project estimates of specific legacy orders, the performance is likely to improve in the medium term with the revival of the commercial construction segment. The cooling products business, driven by the residential segment, has been performing better than the industry owing to superior brand equity, wider distribution reach and impressive product range. The Company intends to continue to focus on prudent cost control and fiscal management in order to sustain this performance for the rest of the year.